Tokyo regains title of world's most expensive city for expatriates

The US dollar weakening against the Japanese yen pushed Tokyo up in the rankings.

The Japanese capital Tokyo has one again been named the world's most expensive city for expatriates.

According to the Mercer group's Worldwide Cost of Living Survey 2012, Tokyo came second only to Luanda in Angola when the costs of over 200 items, including transport, food, clothing, household goods and entertainment, were compared.

The AFP reports that another Japanese city, Osaka, came third, the Russian capital Moscow in fourth, and Geneva in Switzerland fifth. The Pakistani port city of Karachi was the least expensive city of the 214 surveyed, with living costs around three times cheaper than in Tokyo.

The annual report is published to help companies assess compensation allowances for expatriate workers and uses New York as a reference.

The Guardian says that some American cities also proved to be "remarkably cheap" with Winston Salem, in North Carolina show to have the lowest cost of living of any major urban area in the US. Chicago was ranked 110th overall and Washington DC 107th.

However, British cities have fallen down the list in recent years, reflecting the weakness of sterling against the US dollar. This year, London was the 25th most expensive city, down from 18th last year. Other major European cities like Paris, Rome and Amsterdam also slid down the rankings.

The BBC explains that a weaker euro and sterling has significantly reduced the costs for overseas firms, while the relative boom in many Asia-Pacific economies has pushed up bills for expatriates in that region. European firms would have faced rises of up to 15% in Australia and 8% in Japan purely on the basis of exchange rate movements, the news service says.